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RONA Buys C$150M Plumbing Distributor Noble Trade


Hardware and renovation products distributor and retailer RONA, Boucherville, Quebec, has acquired Noble Trade Inc., a plumbing and heating supply wholesaler in Ontario with annual sales of about C$150 million. The purchase price was close to 7X EBITDA, RONA executives said in a conference call.


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Noble Trade was created in 1998 with the merger of Trade Plumbing Supplies and Noble Plumbing Supplies. The company has posted average annual sales increases of 27% since 1998. Most of that growth was organic, with either new stores or sales growth at existing stores, said Noble President Michael Storfer.


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Storfer said Noble sold to RONA because it ...

Hardware and renovation products distributor and retailer RONA, Boucherville, Quebec, has acquired Noble Trade Inc., a plumbing and heating supply wholesaler in Ontario with annual sales of about C$150 million. The purchase price was close to 7X EBITDA, RONA executives said in a conference call.


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Noble Trade was created in 1998 with the merger of Trade Plumbing Supplies and Noble Plumbing Supplies. The company has posted average annual sales increases of 27% since 1998. Most of that growth was organic, with either new stores or sales growth at existing stores, said Noble President Michael Storfer.


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Storfer said Noble sold to RONA because it had resources it needed to grow the business. “We thought they were the most entrepreneurial, and would allow us to continue to operate under the same guidelines,” he said.


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Noble has more than 300 employees and 19 branches with one distribution center in Ontario. More than half those branches are in the Greater Toronto area. This will add to RONA’s 620 branches, 25,000 employees and sales of about $5.7 billion last year.


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Noble significantly expands RONA’s customer base into the professional and commercial arena, which is less cyclical than RONA’s traditional customer base in residential and retail. Storfer said Noble has traditionally had a broad customer base, with no customer making up more than 5 percent of sales. Its average transaction size is more than $100.


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The move also expands RONA’s product base in plumbing and HVAC. RONA’s sales are currently just 8% plumbing and HVAC. Storfer estimated the market potential for plumbing and HVAC in Ontario was about $1 billion. In all of Canada, he estimated it at $13 billion.


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Noble sales in Toronto lean toward new building construction, while stores in smaller markets tend to cater to the repair markets.


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The acquisition gives RONA a base for growth in and out of Ontario. CEO Robert Dutton said RONA may consider between five and 10 acquisition opportunities based on the Noble buy.


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RONA and Noble share about 60% of their vendors, Dutton said.


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RONA also bought retailers Chester Dawe and Curtis Lumber as well as Materiaux Coupal in the past year. RONA, which uses big-box stores as part of its go-to-market strategy, already competes with Home Depot, but will add Lowe’s to that list soon. The retailer has announced plans to enter Canada.

Related Links:
RONA Inc. Acquires BC-based Mountain Building Centres

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